Why Professional Due Diligence Matters - A Cautionary Tale
Case Background:A local manufacturing group nearly acquired a problematic company for HK$28 million before engaging SMEBro's due diligence team. What we uncovered saved them from a costly mistake.
Critical Issues Uncovered:1. Financial overstatements: Revenue inflated by 32%2. Undisclosed liabilities: HK$2.1 million in hidden debts3. Cash flow concerns: Only 45 days of operating liquidity
Our Due Diligence Process:
Financial Verification
Adjusted EBITDA from reported HK3.8mtoactualHK3.8mtoactualHK2.6m
Identified HK$1.2m in questionable transactions
Risk Assessment
4 retail locations with unfavorable lease terms
Pending labor dispute with HK$850k potential liability
Inventory valuation discrepancies
Deal Restructuring
Negotiated purchase price down to HK$19.5m
Implemented 12-month earn-out provision
Established HK$1m escrow for contingencies
Client Feedback:*"SMEBro's team identified risks we completely missed. Their 87-page report became our negotiation roadmap, saving us HK$8.5m and countless headaches."*
Why Businesses Choose Us:✓ HKICPA-certified forensic accountants✓ Specialized in HK/SME transactions (HK$10m-100m range)✓ Practical risk mitigation strategies✓ Fixed-fee engagement model
Get Protected Before You BuyContact us for a free due diligence checklist - because some surprises are too expensive to discover later.